REITs are unique vehicles, with special needs that distinguish them from other companies engaging directly or indirectly in the acquisition, development, operation or financing of real estate. In addition, the rules regarding REITs are extensive, complex, and constantly changing.
PricewaterhouseCoopers can deliver a full range of services that add value to all organizations engaged in REIT activities, helping clients with strategic issues related to maximizing returns to their shareholders.
We have significant experience in dealing with audit, tax and regulatory issues associated with REIT formations, acquisitions, dispositions, recapitalizations, capital formation and related matters. Working closely with the IRS, we have developed a substantial and detailed knowledgebase of private letter rulings as well as the unwritten industry norms and customs. We also work closely with the SEC, which is of great value when a private client is going public or a publicly traded company decides to access the capital markets. Our tax specialists have assisted clients across the country in analyzing the outcome of creating a REIT, UPREIT or DOWNREIT structure, and in implementing planning strategies to minimize the tax impact of the transaction while maximizing the return to the property owners.
PricewaterhouseCoopers is a leading provider of professional services to the REIT industry. PricewaterhouseCoopers also provides advisory services to those companies considering converting to REIT status as well as those considering selling their portfolios to a REIT.
Our services include:
- Market analysis and assessment
- Acquisition and due diligence
- Compensation planning
- Systems management control
- Operations and benchmarking analysis
- Portfolio valuations and appraisals
- Portfolio roll-ups
- Audit and tax services and
- IRS and SEC compliance
- Property tax appeal and reduction
- Capital markets advice
A sample of our REIT transaction experienced includes the following:
IPO consulting
We have led many clients through IPOs and consulted with them concerning the acquisition of a number of properties and timely Form 8-K reporting. We were involved with the associated due diligence process, assisting in preparing pro forma financial information and completing the required audits.
Acquisitions/due diligence
PricewaterhouseCoopers consulted with a client on the acquisition of, and their advisory contracts for, two closed-end REITs. We also helped address complex qualifying income tests and ongoing REIT accounting and reporting issues for these new entities.
REIT/UPREIT consulting
We performed property inspections, financial analysis and valuation analysis of 36 regional malls for the purpose of assisting in the due diligence for a potential REIT formation. The total property value was approximately $1.7 billion and all properties were held in commingled funds or separate accounts for a pension fund. The analysis was performed as part of a divestiture strategy.
IRS private letter rulings
We have worked with a number of REITs and their attorneys to get private letter rulings covering many issues critical to maintaining REIT status, including one of the first UPREITs to request a ruling. In this case, the ruling covered a subsidiary which held nonqualifying business income and performed the REIT’s customary services. The IRS ruled favorably that the management fee income for the portions of the entity’s ownership in the underlying partnership investments did not create "bad" income. The PricewaterhouseCoopers team also developed computer models to calculate UPREIT debt and depreciation allocations.
Technical SEC and accounting consulting
We were instrumental in shaping the current financial reporting model used to report predecessor financial information in IPO filing documents. We also are leaders in significant NAREIT reporting initiatives such as the depreciation, acquisition department cost and segment disclosure projects. We have assisted many audit and non-audit clients with management responses to difficult SEC comments reflected in public filings.
